When Balasubramanian Venkatachalaperumal retired from Oil and Natural Gas Corporation (ONGC) in FY20, he received Rs 19.05 lakh as leave encashment. Accordingly, he filed his income tax return (ITR) on October 29, 2021, declaring a total income of Rs 31.62 lakh after claiming tax exemption on the entire leave encashment amount under Section 10(10AA)(ii).
But he soon received a notice from the income tax department. While processing his ITR, the department's centralised cell in Bengaluru restricted his leave encashment exemption at Rs 3 lakh and added the remaining amount to his taxable income, calculating his total income at Rs 47.68 lakh.
